Abstract

The thesis looks at the determinants of the location of economic activity and the impact that different location patterns can have on economic and social outcomes. Chapter 1 provides a brief introduction and summary of the remaining chapters. Chapter 2 looks at neighbourhood effects on school drop out rates using data from the Australian Youth Survey. We identify two different types of neighbourhood effects. First, teenagers are more likely to drop out if the average drop out rate in the neighbourhood is high. Second, teenagers are more likely to drop out if they live in neighbourhoods with a high percentage of adults with vocational qualifications. Chapter 3 uses similar data to test for neighbourhood effects at different spatial scales. We find that educational composition of larger neighbourhoods influences drop out rates, possibly reflecting the structure of local labour market demand. We also find that low socio-economic status of the immediate neighbourhood has an adverse impact on drop out rate. Chapter 4 considers the evolution of European regional unemployment. European regions have experienced a polarisation of their unemployment rates between 1986 and 1996, as regions with intermediate rates have moved towards either extreme. Regions' outcomes have closely followed those of neighbouring regions. This is only weakly explained by regions being part of the same Member State, having a similar skill composition, or broad sectoral specialisation. Even more surprisingly, foreign neighbours matter as much as domestic neighbours. All of this suggests a reorganisation of economic activities with increasing disregard for national borders. Chapter 5 considers mobility within the US city size distribution. Papers that study city size distributions have concentrated predominantly on the shape of that distribution, while ignoring mobility within the distribution. We develop a series of tools that can be used to study such intra-distribution dynamics and apply them to data from the US. Chapter 6 uses a similar set of tools to examine spatial aspects of the evolution of the US system of cities. We find that some features of that evolution are consistent with theoretical models developed by the new economic geography.